China's largest power battery supplier CATL has denied media reports that it plans to raise lithium iron phosphate (LFP) battery prices by 10 percent to reflect higher raw material costs.

On Monday, Digi Times reported that with the China-made Model 3 price increase, rumors suggest may follow suit with a 10 percent price increase.

The report mentioned that LFP raw material prices have jumped 50 percent this year, but battery suppliers have absorbed the price hike themselves out of fear that it would lead to lost orders.

The report cited sources as saying that most LFP battery makers want CATL to take the lead in raising prices in response to the steep rise in LFP material costs to make it easier for the industry to follow suit.

On Tuesday, CATL was quoted by as saying that reports that the prices of its LFP batteries would be raised were not true.

The continued rise in raw material prices is a problem currently facing China's manufacturing sector, which is also hitting the auto industry.

On May 8, Tesla announced that effective immediately the China-made Model 3 Standard Range model, the company's lowest-priced CATL LFP battery-equipped model in China, was going up by 1,000 yuan ($155).

The model was previously priced at RMB 249,900, and the latest price is RMB 250,900.

Tesla said this adjustment also reflects the actual situation of cost fluctuations.

Information on Tesla's China website shows that the price of the Performance version of the other Model 3 model sold in China, a two-motor all-wheel drive with a ternary lithium battery, remains unchanged at RMB 339,900.

CATL is the largest supplier of power batteries in China, with approximately 50% of the market share.

In April 2021, CATL's power cell installed base was 3.82 GWh, with a market share of 45.5%. This is the first time CATL's market share has been below 50% this year, a new low since July last year.

If it does raise its LFP battery prices by 10%, then China-made Tesla Model 3 entry-level model and the lower-priced LFP-equipped models that Motors just started delivering will have to face higher costs.

(Source: CATL)